Cebu Landmasters plans maiden P5-B notes issues

Cebu Landmasters Inc. is tapping the bond market for the first time with the planned issuance of P5 billion worth of corporate notes.

The notes issue was assigned a credit rating of PRS Aa, with a stable outlook by the local credit watchdog Philippine Rating Services Corp.

Obligations rated PRS Aa are of high quality and are subject to very low credit risk. This means the obligor’s capacity to meet its financial commitment on the obligation is very strong.

A stable outlook is assigned when a rating is likely to be maintained in the next 12 months.

Proceeds will be used to partially finance the company’s projects, which include the Davao Matina Business Park and the Ming-Mori Techno business Park in Minglanilla, Cebu.

The rating and outlook took into account CLI’s competitive advantage in the Visayas and Mindanao markets, the positive economic and industry outlook, its continuously growing revenues and net income and good coverage of interest and debt.

CLI is a Cebu-based real estate company, with a portfolio of subdivision house and lots and townhouses, residential condominium units, as well as office projects and retail space.

As of the end of December last year, CLI completed 15 projects, a mix of vertical development or residential and office condominiums and residential subdivisions/ housing.

“These projects are made up of a total of 4,770 units which are 97 percent sold out, an indication of CLI’s strength as a trusted brand in the local housing market in Cebu,” Phil Ratings said.

It has 11 ongoing projects located in Cebu (9), Davao City (1) and Cagayan de Oro (1). These include a hotel and residential and office condominiums, with a total of 5,084 units, of which 4,465 units or 88 percent were sold.

Due to the demand for its projects, the company adopted an “acquire-to-develop strategy.” This allows the company to turn around projects faster.

According to CLI, it takes the company only six months from land purchase to project launch and two to three years from launch to turnover.

“This strategy enables the company to meet the current demand of the fast-paced and changing lifestyles of the market. It likewise lessens the burden on its financial position while minimizing exposure to possible losses. This is proving to be a profitable strategy for the company with such recording significant returns on assets and equity.

CLI has already begun purchasing land for its 2019 project lineup and has ongoing negotiations in new areas such as General Santos City, Butuan City, Ormoc City and Roxas City.

The company reported a 66 percent jump in net earnings to P1.29 billion last year on the back of a 66.4 percent surge in revenues on the back of solid growth of real estate sales and rental income.